1 Small-Cap Stock for Long-Term Investors and 2 to Be Wary Of

May 14, 2025 at 00:38 AM EDT

EYE Cover Image

Investors looking for hidden gems should keep an eye on small-cap stocks because they’re frequently overlooked by Wall Street. Many opportunities exist in this part of the market, but it is also a high-risk, high-reward environment due to the lack of reliable analyst price targets.

These trade-offs can cause headaches for even the most seasoned professionals, which is why we started StockStory - to help you separate the good companies from the bad. That said, here is one small-cap stock that could be the next 100 bagger and two best left ignored.

Two Small-Cap Stocks to Sell:

National Vision (EYE)

Market Cap: $1.49 billion

Operating under multiple brands, National Vision (NYSE: EYE) sells optical products such as eyeglasses and provides optical services such as eye exams.

Why Do We Avoid EYE?

Store closures are a headwind for growth and suggest it’s rightsizing operations to optimize sales at existing locations
Operating margin of 0.3% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
Underwhelming 3% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its decreasing returns suggest its historical profit centers are aging

National Vision’s stock price of $18.86 implies a valuation ratio of 31.2x forward P/E. Check out our free in-depth research report to learn more about why EYE doesn’t pass our bar.

Patterson Companies (PDCO)

Market Cap: $2.77 billion

With roots dating back to 1877 and serving over 150,000 customers across North America and the UK, Patterson Companies (NASDAQ: PDCO) is a specialty distributor that supplies dental practices and animal health professionals with equipment, consumables, pharmaceuticals, and practice management software.

Why Does PDCO Worry Us?

Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
Performance over the past five years shows its incremental sales were less profitable as its earnings per share were flat
Negative free cash flow raises questions about the return timeline for its investments

Patterson Companies is trading at $31.34 per share, or 13.6x forward P/E. Read our free research report to see why you should think twice about including PDCO in your portfolio.

One Small-Cap Stock to Watch:

Astronics (ATRO)

Market Cap: $1.05 billion

Integrating power outlets into many Boeing aircraft, Astronics (NASDAQ: ATRO) is a provider of technologies and services to the global aerospace, defense, and electronics industries.

Why Does ATRO Stand Out?

Market share has increased this cycle as its 19.1% annual revenue growth over the last two years was exceptional
Incremental sales over the last two years have been highly profitable as its earnings per share increased by 81.3% annually, topping its revenue gains
Historical investments are beginning to pay off as its returns on capital are growing

At $29.90 per share, Astronics trades at 19.4x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.

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